As of April 2011, Employers will be liable to criminal prosecution for the actions of employees involved in bribery, irrespective of whether they were aware of it, unless they can show that they had in place adequate measures to prevent bribery.
This is a short article aimed at small to medium sized businesses who are unlikely to have the benefit of in house legal advisors but who need to be aware of the provisions of the Bribery Act 2010, which comes into force next April.
Introduction
The Bribery Act differs from most forms of legislation because it can render a business liable to prosecution as a consequence of the behaviour of it’s employees – even if the Directors had no knowledge of such behaviour!
The Act creates what is known as a ‘reverse burden of proof ‘ in that it is a criminal offence for a commercial organisation to fail to prevent bribery (by it’s employees) unless the organisation can demonstrate that it had adequate bribery prevention procedures in place.
Ordinarily we have a presumption of innocence. Under the Bribery Act there is a case for saying that the opposite applies. It need not matter whether the company had actual knowledge of the actions of employees involved in bribery. The emphasis is upon whether the company had adequate measures in place to prevent bribery.
Main Provisions
There are four types of offence that can be committed:
- offering, promising or giving a bribe
- requesting, agreeing to receive or accepting a bribe
- bribing a foreign public official
- failure by a commercial organisation to prevent a bribe being paid for or on it’s behalf
Sentences
Upon conviction in the Crown Court any offence committed under the Act is punishable by an unlimited fine and/or up to 10 years imprisonment.
What’s more the court can impose Confiscation and Civil Recovery orders under the Proceeds of Crime Act 2002. Confiscation is a highly controversial area. Take the following scenario.
A bribe of £10,000 is paid by a senior member of a sales team. The business then secures say £1,000,000 worth of business, with profits of say £100,000. Upon conviction in the Crown Court the company could be liable for a confiscation order in the sum of £1,000,000 even though the company had no actual knowledge of the actions of the bribing sales representative!
This is because under The Bribery Act, the company will be guilty unless adequate safeguards were in place and once convicted confiscation is turnover based as opposed to profit based.
Another worrying consequence of a conviction is the risk that it may preclude a company from tendering for public contracts.
Safeguarding Your Business
It is a defence for a business to prove that it had in place procedures designed to prevent bribery. Lord Bach hit the nail on the head when he stated on behalf of the Ministry of Justice, ‘it would be wrong to leave organisations open to a heavy fine if a rogue element bribes on behalf of the organisation when those who manage it can show that they have put in place procedures designed to prevent bribery’.
The key issue therefore is having in place adequate procedures to prevent bribery.
The good news is that help is at hand. The Government is to produce Guidance on the measures businesses can put in place to prevent bribery. On 14th September 2010 the Ministry of Justice issued a Consultation on the subject. The Consultation runs for eight weeks until 8th November 2010.
The final Guidance will be available from 1st April 2011 when the Act comes into force. However the consultation contains draft guidance which contains ‘Six Principles for Bribery Prevention’ namely,
- Risk Assessment
- Top Level Commitment
- Due Diligence
- Clear Policies and Procedures
- Effective Implementation
- Monitoring and Review
It is not proposed to go into more detail in relation to the Six Principles at this stage, this will be done in a future article. What is clear is that many businesses that may have been completely unaware of the legislation will now need to start to think about gearing up for next April.
Matthew Claughton is the Managing Partner of Crime, Fraud and Regulatory specialists, Olliers Solicitors.
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